- - Tuesday, April 29, 2014


Bureaucrats love hearings and they love complexity. Hearings let bureaucrats exercise authority, expand discretion and impose costs on others, while pleading it’s all in the name of good process. And complexity obfuscates what the agency is doing, encouraging public apathy. No agency has mastered these lessons better than EPA. Look at the environmental agency’s stunningly complex plan to mitigate the predicted effects of climate change, a plan that includes hearings that are unwise, illegal and costly.

The whole plan is too intricate to be described in a single column — or a series of short books for that matter — but the EPA’s interpretation of the Clean Air Act, underlying its climate change program now before the Supreme Court, merits discussion on its own. The EPA would over time apply the Clean Air Act to prevent even the most insignificant construction projects until it has held a permitting hearing to decide what controls must be adopted — a projected two-year process with an average private sector cost of $60,000 for each hearing. Building even a new classroom at the local elementary school would require a hearing under this approach, absent the agency’s asserted power to “tailor” the statutory emissions thresholds in its sole discretion. So would renovating a church or constructing any number of other buildings.

This cost and delay of this approach are difficult to justify — especially in the current economic climate. Any minor contribution to global climate change from activities subject to the hearing process almost certainly is not worth the time, energy and cost of the hearing. This is shooting a gnat with a howitzer; only here the howitzer is pointed more at thousands of businesses and local communities than at climate problems.

But the truly astounding part of this plan is how unnecessary it is. The EPA could address the issues much more simply, without lengthy case-by-case hearings, through an emissions-trading system that states could opt into, like one the agency has used in the past. This or a similar approach, which EPA will soon propose for existing power plants, predictably would produce much greater greenhouse gas reductions with little government intervention. But a market-incentive system cannot work if the Supreme Court approves the permitting-hearing regulation, which would overburden thousands of transactions within and between states, even though most of the proposals would involve net pollution reductions.

A flexible incentives system would let individual utility plants trade with one another to find the cheapest and quickest reductions of CO2. It isn’t perfect, but this approach would encourage quicker, less costly ways of achieving desired reductions in emissions, rather than having government micromanage each step along the way.

Given its advantages, economists of all stripes would support the simpler emissions-trading alternative. So would most in the business community and in local governments who don’t relish interference from Washington. Sometimes individual determinations are needed for government to do its job, and hearings (or similar permitting processes) are the only effective means to make those determinations. (Think of licensing specific drugs for safety and efficacy.) But the sort of activities at issue here are so numerous, so varied, so time-sensitive and pose such a small threat to broader public interests that the case-by-case permitting-hearing approach seems absurd.

Yet it isn’t clear that the public (or even the Supreme Court for that matter) understands that the permitting-hearing approach is irreconcilable with the emissions trading alternative. When the case was argued before the court, Justice Stephen Breyer almost seemed to see that point, asking the government’s lawyer, “if [the Clean Air Act] is over there letting them do precisely what they want, why do you need this [permitting regime] too?” And Justice Ruth Bader Ginsburg, in a 2011 majority opinion in AEP v. Connecticut, observed that “Congress could hardly pre-emptively prohibit every discharge of carbon dioxide unless covered by a permit. After all, we each emit carbon dioxide merely by breathing.”

Hopefully, the high court will see the irreconcilable conflict as it considers the EPA’s latest climate-change venture. Freedom from expanded discretionary bureaucratic permitting authority, with its costs and delays, is more valuable than the climate benefit EPA claims, especially given the agency’s potential alternative route to a better end, which is scheduled for public proposal in early June.

C. Boyden Gray has served as White House counsel, U.S. ambassador to the European Union, special envoy for Eurasian energy and special envoy for European Union affairs. “Arbitrary and Capricious” runs monthly.

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